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Post by jeffolie on Feb 10, 2007 19:47:53 GMT -6
Merrill Forces Margin Calls on B&C Clients Merrill Lynch & Co. -- which has been stung by two high-profile subprime bankruptcies in six weeks -- is conducting margin calls on certain B&C originators that receive financing through the firm's warehouse group. I can only find the story on National Mortgage News and no details without a subscription www.nationalmortgagenews.com/ this was posted on the yahoo new board: Yeah, here's the deal: Merrill is effectively OUT of the subprime mortgage business. They are calling every loan they can from every B&C lender possible. It's a run on the bank. I have a friend that runs a previously-profitable subprime mortgage originator and he got a call from Merrill two weeks ago saying, "We're pulling your line - you've got 60 days to liquidate your production and pay us back in full." That's going on all over the place and pretty soon other lenders are going to follow suit. It's a viscious cycle and it's only going to get worse from here. Look out below... forum.themarkettraders.com/read-m/71/641/716#msg-716
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Post by unlawflcombatnt on Feb 11, 2007 4:01:07 GMT -6
Margin calls?
It's starting to sound like 1929.
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Post by jeffolie on Feb 11, 2007 12:41:28 GMT -6
Lots of subprimes are going to disappear without funding sources such as Merrill. Without subprimes supplying liquidity to the housing segment for first time buyers, the housing market is doomed. Subprimes were 25% of the 2006 mortgages.
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Post by jeffolie on Feb 16, 2007 22:14:16 GMT -6
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Post by unlawflcombatnt on Feb 18, 2007 16:28:45 GMT -6
Thanks for the interesting article. I have a small amount of money in Wells Fargo, and I'm going to pull it out ASAP. You have to love the comment by finance professor Joseph Mason of Drexel University. Referring to the impending collapse of the subprime loan industry, he bleats: " It will hurt the subprime borrowers we are trying to help." Help??? They're knowingly making loans to people that can't pay them back, due to their poor financial situation. They're not trying to "help" them. They're trying to profiteer off them. They tried to expand the market of people they could loan money to. Who they're really trying to help are the banks that made these irresponsible loans. They're worried that the rich bankers & investors who perpetuated this scam will become "less rich." If they were really interested in "helping" the subprime borrowers, they wouldn't have loaned them the money in the 1st place. They would have told them that renting was a better option for them, not buying. But the banks and mortgage lenders couldn't have made any money off them if they rented. So they convinced them to borrow money to buy, while hoping to throw the default risk onto someone else, such as the unknowing buyers of mortgage-backed securities. And these MBSs are sold to mutual funds and pension funds, whose beneficiaries have no idea how much risk this entails.
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